Bank of China (Hong Kong) Ltd v. Cosan Ltd and Others

CACV 331/2006

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF APPEAL

CIVIL APPEAL NO. 331 OF 2006

(ON APPEAL FROM HCA NO. 1600 OF 2004)

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BETWEEN

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Before:  Hon Tang VP and Chu J in Court

Date of Hearing: 28 February 2007

Date of Judgment: 8 March 2007

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J U D G M E N T

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Hon Tang VP (giving the judgment of the Court):

1.The 2^nd defendant is appealing the judgment of Sakhrani J, who dismissed his appeal against the order for summary judgment against him by the Master, in the sum of over $6.2 million, of which approximately $5.6 million was the principal.

2.On 29 January 2007, Rogers VP ordered security for costs in the appeal in the sum of $153,000.

3.This is the 2^nd defendant’s appeal from the order of Rogers VP.

4.One of the principal grounds of appeal is that the 2^nd defendant’s substantive appeal has substantial merits.  However, lack of merits is not essential to the grant of security, though, depending on the circumstances of the particular case, if the merits are strong, that might be a circumstance which tip the balance against ordering of security.  See Hong Kong Civil Procedure 2007, 59/10/35.

5.The 2^nd defendant who appeared in person submitted that in ordering the security, Rogers VP had misunderstood the decision of this court in CACV 120 of 2005, unreported, 8 February 2006, which was written in Chinese.  At the hearing before Rogers VP, the 2^nd defendant appeared in person and the plaintiff had provided to the court a translation of a summary of that decision.  However, the 2^nd defendant submitted that Rogers VP might not have understood the effect of that judgment, in particular paras. 29 and 30.

6.But the principles under which summary judgments may be given are well known and can be found in judgments written in English as well as judgments which are written in Chinese.  CACV 120 of 2005 was a decision which turned on its facts.  In that case, this court decided, by a majority, that having regard to the factual disputes in that case, a trial was necessary.  It does not follow that on the facts of the present case, a trial is necessary.  Here, having considered the documents and read the carefully prepared judgment of Sakhrani J, we must say that there is great force in Rogers VP’s observation that the defence raised by the 2^nd defendant is untenable.

7.But this is not the occasion to decide the merits of the substantive appeal.  For the present purpose, it is sufficient for us to say that this is not a case where the merits are such that security should not be ordered.

8.The 2^nd defendant does not contend that he is impecunious.  He submitted, however, that the plaintiff has failed to prove that his financial circumstances are such that either he would be unable to pay the costs of the appeal, or the plaintiff would be likely to encounter undue delay or be put to undue expense in enforcing any order for costs in respect of the appeal.

9.On the basis of the information contained in the 3^rd affirmation of Lee Wai-ho, a bank officer, filed on behalf of the plaintiff on 24 November 2006, we are satisfied that special circumstances exist which make the order of security appropriate.  The 2^nd defendant holds an Australian passport.  He is retired.  It appears that he has an income of about $272,000 a year.  The plaintiff has not been able to locate any assets of the 2^nd defendant within the jurisdiction.  There is no evidence of the 2^nd defendant’s means.

10.Thus, circumstances exist on the basis of which the court may order security for costs.

11.Rogers VP, in exercise of his discretion, ordered security.  That being the case, this court is not entitled to interfere with the exercise of discretion, except on the well-known grounds upon which exercise of discretion can be interfered with.  See Hong Kong Civil Procedure 2007, 59/14/26.

12.No such ground exists.  This applies as much to the decision to order security as to the quantum.

13.Moreover, on the fact of the present case.  If this court is required to exercise its discretion, we would similarly have ordered security and in a similar amount.

14.The application is therefore dismissed.

15.We make an order nisi that the plaintiff is to have the costs of this application, such costs to be taxed if not agreed.

Mr Godfrey Lam, instructed by Messrs Tsang, Chan & Wong, for the Plaintiff.

The 2^nd Defendant, in person, present.